On Your Own

Yes, You can Start a Business This Year

OnYourOwnThere's a boom in small business, and a significant percentage of it is being driven by Boomers. As much as one-quarter of all new businesses are started by Boomers age 55 to 64, according to the 2017 Kauffman Index of Startup Activity. Older entrepreneurs, even beyond the age of 64, are becoming increasingly common.

The rise in Boomer businesses is not all that unusual. Highly skilled Boomers who are let go from the workplace find that they can leverage their expertise and skills into starting their own business. Boomers who may be tired of working for someone else may see a real opportunity in being self-employed. Still, Boomers should be aware of a sobering statistic reported by the Bureau of Labor Statistics: Half of all small businesses fail by their fifth year.

That doesn't prevent plenty of Boomers from starting a business, but as with anything else, a key to success is going into it with your eyes wide open. Here's some great advice from a Forbes article by Robin Ryan.  She spoke with three experts on business startups and garnered these main points:

Focus on a target audience: Your chances of success are greater if you target a niche and know exactly who your prospects are.

Define your perfect client: "You need to be clear and know the exact type of person you seek to work with, and who will benefit most from working with you."

Go where the prospects are: Once you know who you are targeting, look for them in the right places: the organizations they belong to, the meetings they attend, the publications they read, the websites they visit, etc.

My wife and I left the traditional workforce in our late 50s to strike out on our own. We started a small service business and ran it together for seven years. After selling that business, I became an independent marketing consultant/freelance writer. Both of these reinventions have worked well for me.

Starting a business isn't for every Boomer, but it definitely presents a viable option for many of us.


Should You Freelance in 2019?

OnYourOwnMore and more Boomers face the work-life dilemma as they age. While there is no single perfect solution for everyone, an attractive option may be freelancing. This type of contract or hourly work used to be reserved for writers, designers, photographers and other creative types, but today, freelancing has a much broader definition. That's because the "gig economy" is thriving, so it is possible to freelance in just about any field. A recent study indicates that as much as 35 percent of the American population freelances, and more than half of them (51 percent) prefer freelancing to a traditional job, stating that "no amount of money" would make them switch. Another study puts the typical freelancer's hourly wage at $31 per hour -- but that can go much higher depending upon the market.

There was a time when Boomers only freelanced as "consultants" between jobs -- it was more of a pit stop along the way to "real" employment. Now, however, many Boomers are finding that freelance work can be personally and financially rewarding. It can provide you with a flexible work situation and decent income to supplement retirement savings.

Here are two helpful articles from The Balance that offer valuable information about freelancing:

"The Average Freelancer Salary in the U.S." - In this article, you'll find typical hourly and annual income figures for freelance positions in IT/Programming, Design and Multimedia, Writing and Translation, Sales and Marketing, Engineering and Manufacturing, Legal Services, and Administrative and Customer Support. 

"Best Second Job Ideas" - While this article primarily addresses freelancing as a second job, it offers an excellent overview of the freelance and second job market. It also offers a comprehensive list of "best second jobs" in alphabetical order from A to Z. This list is a great idea starter if you are uncertain what type of freelance position you might want to seek.

In addition to the above articles, do a search on freelance jobs and you'll discover a wealth of resources available to you. Maybe freelancing is the work-life solution you are looking for.


The Dirty Little (Encouraging) Secret About Entrepreneurs

OnYourOwnIt is often assumed that the most successful entrepreneurs in American society are young go-getters willing to take the ultimate risk and start a new business. Well you can substitute the word "youthful" for "young," because it turns out that middle-aged entrepreneurs are more successful than those who are young. Startling to some (perhaps including Boomers), this was demonstrated in a research study conducted this year. "Age and High-Growth Entrepreneurship," a paper written by Pierre Azoulay (MIT), Benjamin F. Jones (Northwestern University), J. Daniel Kim (MIT), and Javier Miranda (U.S. Census Bureau) arrives at the following conclusion:

"Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs."

This conclusion is based on Census Bureau data used to study the ages of founders of growth-oriented start-ups in the past decade.

The authors of the paper write that "all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged." They go on to say, quite specifically, that "Conditional on starting a firm, a 50-year-old founder is 1.8 times more likely to achieve uppertail growth than a 30-year-old founder. Founders in their early 20s have the lowest likelihood of successful exit or creating a 1 in 1,000 top growth firm."

There can be no doubt about what the research discovered: "We find that age indeed predicts success, and sharply, but in the opposite way that many observers and investors propose. The highest success rates in entrepreneurship come from founders in middle age and beyond."

When you think about it, of course, this makes perfect sense. Why wouldn't someone with greater maturity and deeper business experience be more successful as an entrepreneur?

Still, the research paper, which you can access via the link above, might be useful to you in convincing friends, family, and financial lenders that you can succeed at doing your own thing! This research should be very encouraging to any Boomer who wants to start a business. Not only is it possible for you to do so, the evidence points to the fact that you are likely to be more successful than younger entrepreneurs, despite the typical perception. 


Tax Benefits for Self-Employed Boomers

OnYourOwnWhile there has been controversy surrounding recent tax legislation, it created what could be a boon for self-employed Boomers. The self-employed, contract workers, and freelancers stand to gain in a number of ways because of the way business deductions have been modified.

Writing for AARP, retirement expert Kerry Hannon does a good job of outlining the key tax benefits that may be available to you if you are self-employed, do contract work, or freelance. As with any such advice, though, everyone's situation is different and it always makes sense to consult a tax professional.

Hannon highlights a number of key areas and discusses them, including:

  • The qualified business income deduction: You could be eligible for a tax deduction of 20 percent as a sole proprietor or even if you are part of a partnership, own an LLC, or participate in an S corporation.
  • Higher standard deduction: A higher standard deduction may remove the need to itemize personal deductions.
  • Home office deduction: You could be eligible for a home office deduction (this existed before the new tax law went into effect).
  • New equipment write-off: You can potentially deduct a larger amount for new equipment.
  • Business expenses: Hannon writes that these are basically the same with a few new restrictions.
  • Medical expenses: The self-employed can deduct medical expenses, but the percentage allowed has actually gone down for 2018 and will go back up in 2019.
  • Education and training: Work-related education is deductible with some restrictions.
  • Automobile expenses: Mileage driven for business is deductible at a slightly higher per-mile rate in 2018.
  • Retirement savings: If you're 50 or older, and you don't have an employer retirement savings plan, you can put up to $6500 into a traditional IRA.

Hannon wisely recommends scrupulous book-keeping if you are self-employed. Read her informative article here: 
https://www.aarp.org/work/small-business/info-2018/freelancers-new-tax-bill.html


Why the Gig Economy May be a Boomer's Best Bet

OnYourOwnI've written frequently about how age discrimination tends to force Boomers out of their jobs and into early retirement. In March 2018, a rather stunning report by Pro Publica and Mother Jones uncovered alleged massive elimination of older workers at no less a stellar company than IBM. According to the Pro Publica investigation, "ProPublica estimates that in the past five years alone, IBM has eliminated more than 20,000 American employees ages 40 and over, about 60 percent of its estimated total U.S. job cuts during those years. 

"In making these cuts, IBM has flouted or outflanked U.S. laws and regulations intended to protect later-career workers from age discrimination, according to a ProPublica review of internal company documents, legal filings and public records, as well as information provided via interviews and questionnaires filled out by more than 1,000 former IBM employees."

Sadly, this is just one example of widespread actions taken against highly skilled Boomer workers who have decades of experience, want to continue to work, and in many cases, need to continue to work. Once let go, of course, age discrimination continues to plague them, since an unfairly fired Boomer often has great difficulty getting re-hired by another company.

This is one reason the gig economy is flourishing. Self-employment in the U.S., according to the Bureau of Labor Statistics, is highest among people 65 and older (24.1 percent), with second highest among people 55 to 64 years of age (14.7 percent). A forecast by Intuit predicts that 7.6 million Americans will be working in the "on-demand" economy by 2020, which is  more than double the number in 2015. The on-demand economy will continue to see healthy growth in subsequent years, with some 79 percent of workers saying they take on part-time gigs.

Some other facts about the gig economy are impressive enough to open the eyes of Boomers who need to seek non-traditional employment, as reported by The Balance:

  • 70 percent of self-employed workers chose that status of their own free will for either a primary or supplemental source of income (McKinsey Global Institute)
  • Over 50 percent of self-employed workers want to stay that way -- they intend never to return to traditional full-time employment (LinkedIn ProFinder)
  • 20 to 30 percent of workers in the U.S. and Europe are engaged in "some form of independent work" (McKinsey Global Institute)
  • Numerous industries are showing robust growth for self-employed workers, including healthcare, real estate, construction, finance, and software/IT services (LinkedIn).

Bottom line: If you are on the outs with full-time employment, maybe it's time to get into the gig economy.

 


That Hobby of Yours May Make You Some Money

OnYourOwnIf you're looking for a little extra income in retirement but you don't really want to work in a traditional job, the most obvious option is working a gig. The "gig economy" is thriving, with such opportunities as car driving services, home rentals, and freelance jobs. But there is another interesting possibility: Turning that hobby of yours into a money-maker. One recent study indicates that over one-quarter of American entrepreneurs launched startup businesses from a hobby.

If this sounds intriguing, be sure to read "A Beginner's Guide to Monetizing a Hobby" at MagnifyMoney.com. This comprehensive article covers many of the issues related to turning a hobby into a money-making venture, including:

  • Assessing goals
  • Testing your hobby as a business
  • Outsourcing
  • Finding clients
  • Marketing
  • Pricing
  • Common mistakes
  • Tax implications

The article also includes stories of hobbyists-turned-entrepreneurs.

The area in which I live is flush with artists and craftspeople. While the competition is stiff, I personally know two Boomers who retired from traditional jobs and pursued artistic money-making hobbies. One of them, a former business executive, had a passion for working with wood. He learned the craft and started to make small objects, such as pens and Christmas tree ornaments, as a hobby. He turned that into a part-time business. Another person, a former floral designer, had a talent for watercolor painting. She concentrated on painting birds and began to sell her work at craft fairs. People liked the bird paintings so much that she opened a small studio and has become locally recognized for her unique style. She is even being asked to do custom paintings.

Maybe becoming a money-making hobbyist is something you could consider to spark life's second half.    


Your Child as Your Business Partner

OnYourOwnFor some Boomers, the dream of owning a business is a family affair. I have first-hand knowledge of this: My wife and I started a small service business together after we left our professional careers. We wrote a book about it: Let's Make Money, Honey: The Couple's Guide to Starting a Service Business. While not all couples have the ability to work together, we found it to be a good fit for us and a great experience.

Here's a different spin on starting a family business: Taking the plunge with your adult child. A recent article in The New York Times explores this possibility and cites a few relevant examples of Boomers who made working with their children work. There are solid reasons such an arrangement can be successful. For one thing, Boomer parents seem to have better relationships with their adult children than previous generations. For another, adult children ages 18 to 34 are more likely to live in their parents' homes, making working together a natural next step.

There is a practical aspect to a parent-child business proposition, writes Christopher Farrell: "Age discrimination can be a major hurdle to employment for those 50 years and over. At the same time, young people can find it tough to land a job that’s engaging and offers a career path. For both age cohorts, starting a business can often be a better alternative." Another nice benefit: If the business is successful, the Boomer never has to worry about a succession plan; the adult child simply takes over when the Boomer is ready to retire.

A Boomer-adult child business relationship is just one more way Boomers are redefining our retirement years.

 


Is Consulting for You?

OnYourOwnI remember a time when a professional became a "consultant" for a brief period of time while looking for full-time work; sometimes, in fact, "consultant" was a code word on a resume for "on my own until something better comes along." Nowadays, however, consulting is not only a legitimate career path for the self-employed, it is also a viable second career for older professionals.

There are numerous potential benefits to becoming an independent consultant, not the least of which is the very word "independent." Benefits include the potential to earn high income, setting your own schedule, and re-purposing skills you already have and expertise you developed during your first career.

Still, consulting isn't a "slam dunk" for everyone. Writing for NextAvenue.org, Jonathan Dison, author of the book The Consulting Economy, has some sound advice for you before you consider plunging into the world of consulting. He talks about four lessons he wished he had learned before he became a consultant:

  1. Trust is everything
  2. Become indispensable
  3. Know the skills that are in demand
  4. Know your tax write-offs as a consultant

This article is a must-read if you're considering becoming a consultant. If you'd like a copy of Jonathan's book, you can purchase it directly from Amazon below.


Boomers Serving the Boomer Market

OnYourOwnThe notion of being your own boss has great appeal for a growing percentage of Boomers who want to continue to work but on their own terms. Self-employment offers you freedom, flexibility and, potentially, higher income than a traditional and sometimes menial job.

Of all the self-employment options available to Boomers, one of the more intriguing ideas may be to concentrate your efforts on a business that actually serves Boomers. Due to the aging of America, services for those 65 and older are booming. As a result, the "longevity economy" could spell opportunity for an enterprising Boomer, according to Kiplinger. Contributing editor Susan Garland writes, "The inclination of many older individuals to take advice and help from their peers offers aging boomers a big advantage in the growing senior-oriented market. Just think of a service or product that you or your aging parents could use, and it may be a niche that you can fill."

Garland cites as examples a number of Boomers who have entered the market with services targeting the senior set. CPA Barbara Green started a business helping older Americans deal with "their day-to-day financial affairs." Freelance writer Cristina Pastor works part-time as a dementia-care coach. Psychologist Eloise Stiglitz started her own retirement coaching business. Tavis Schriefer came up with a novel way to screen calls from telephone scammers that resulted in a new business designed to protect the elderly.

Imagine what your parents have needed as they age, or what you will need as you advance in age, and there is probably a service opportunity awaiting you. Potential service areas include healthcare, finance, personal shopping, cooking, home safety, specialized organizational services, downsizing consultation, and more. In many cases, older clients will feel much more at ease dealing with a business owner who is older himself or herself.

If you've ever considered striking out on your own, don't overlook an audience segment you already know a lot about -- Boomers like you!


Freelancing at Any Age

OnYourOwn"Older but wiser" is an old adage that Boomers could put to good use when it comes to establishing a freelance career. Often, your background and experience can be a plus in freelancing, unlike in the traditional job market, where younger employees are sometimes favored over older ones. Freelancing is essentially a form of self-employment in which you offer your services on an hourly or contracted job basis, directly to a client company, or via "resellers," who provide you with work on behalf of their clients. You may have heard this referred to as the "gig economy," (working on specific assignments rather than as a part-time or full-time employee) but that's just a contemporary term for freelancing.

There are several attractive aspects to freelancing. Freelancing offers you the ability to be your own boss, set your own rates (although they must be competitive), and enjoy a flexible work schedule. Contrary to popular belief, freelancing is not just for creative types; it used to be that a freelancer typically was a writer or graphic designer, but these days, companies are looking for freelance workers with a wide variety of skills. There are, for example, freelance software engineers, legal assistants, accountants, marketing project managers, and so on.

Carol Tice is an "older" freelancer who worked in banking and law for more than three decades and transitioned into a full-time freelance writer. She has some great advice for Boomers who may want to consider starting a freelance writing career in an article on her blog, "Make a Living Writing." When I read it, I was impressed by the fact that Carol's counsel could just as easily apply to any older freelancer, not just a freelance writer. The five steps she suggests are:

  1. Take stock of your skills
  2. Step up your marketing efforts
  3. Keep learning
  4. Manage your time
  5. Plan ahead.

You can read the entire article here: http://www.makealivingwriting.com/older-freelance-writing-career/